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IT Control Is An Illusion
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SaneIT
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SaneIT,
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4/23/2014 | 9:48:28 AM
In our out
I think throwing hard numbers like 90/10 out there when talking about IaaS, DCaaS or even SaaS is a mistake.  If you are looking at how you do IT based on the amount of work you do internally vs the amount you do externally and you have fixed targets then I don't think you're going to be flexible enough to withstand the rapid changes that every company is seeing right now.  I wouldn't put a % on either side, my approach is to do the things that we can do faster, less expensively and better in house and push anything that is easier to manage and less expensive to maintain on the cloud out to the cloud.  We have a couple of core applications that we just can't push out to the cloud even if we went with an IaaS because we are constantly touching it.  Those applications we'll keep in house and keep them close because they need the attention.   Everything else is fair game, if a company comes along that does it better than we have done it in house then we'll move.  I don't want to lock myself into either mentality that 90% should be in-house or that 90% should be outsourced that way I'm not forcing square pegs into round holes just for the sake of making an artificial target of my own making.
ChrisMurphy
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ChrisMurphy,
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4/23/2014 | 9:49:55 AM
Outsourcing
Really important insight here, Jonathan. I'd add that we heard from top IT leaders at two other major companies at the InformationWeek Conference -- GE and Capital One -- who also said that they were shifting significant work away from outsourcing and back to in-house IT teams, believing that there's competitive advantage from faster and more responsive IT. Mott's view wil be too extreme for many, and his depth of wariness of cloud I don't hear widely shared among CIOs. But he challenges IT leaders to ask a hard question: Is this thing really non-core to what we do? A number of companies that swung to 70% outsourced IT are finding that they had the wrong answer to that question in key areas.
Drew Conry-Murray
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Drew Conry-Murray,
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4/23/2014 | 10:01:35 AM
Innovation Sources
I have to agree with you about calling out Mott's assertion that real business applications don't come from VCs. There are numerous examples, including Salesforce, of enterprise businesses that have been built from startups, though most of the time small, innovative companies end up getting acquired. As for innovation, I think it's possible for incumbents to do a bit of innovation, but it usually takes a significant threat to their business to spur new thinking.
RobPreston
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RobPreston,
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4/23/2014 | 12:15:58 PM
Re: In our out
I've always viewed the goal of 90% in-house IT as more of an aspiration than a hard-and-fast rule. It wants to rely a lot less on outsourcing, so it sets a very high bar. I don't know if GM is precisely measuring the percentages. But it's very serious about going in this new direction. 
danielcawrey
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danielcawrey,
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4/23/2014 | 12:55:38 PM
Re: In our out
I think that SaaS is important, no matter what GM's CIO may think. It's not going anywhere. 

In terms of insourcing versus outsourcing, a lot of it depends on the ability for an organization to attract the right talent. That's not always possible; this is what necessitates outsourcing. I do believe that an insourcing initiative can build a tighter team.

The question is: Can you successfully put the right talent in place? Not always possible. 
Charlie Babcock
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Charlie Babcock,
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4/23/2014 | 1:36:05 PM
Mott's centralized control shut down too many possibilities
I reacted the same way, Jonathan, when I heard Mott describe software as a service as having the same drawbacks as outsourcing. If you want, you can customize your Salesforce.com software as a service. If you want you can make use of the Force.com platform to build auxiliary applications to software as a service. IT maintains a lot of control over SaaS, how it's used and how it can be modified or extended. The cloud can be used as an extension of IT. He tended to view it as a debilitator of IT. I didn't understand how he came by that point of view.
moarsauce123
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moarsauce123,
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4/23/2014 | 6:50:19 PM
As usual, it all depends
What worked for Netflix might not work for GM. Netflix does not build cars and GM is not streaming movies. That means outright dimissing GMs move as wrong is rather bold. Cloud services are fine when the business can operate without them because cloud services are only as good as the Internet connection to them.

The discussion also does not specify which IT tasks specifically are used by GM and Netflix. If Netflix only needs lots of storage and big pipes, those can be found in plenty of places. If GM needs specialized applications that interact with production systems it may not be as easy to find an off the shelf outsourcer that can do that for less. Outsourcing is really only interesting if the same task with the same quality and responsiveness can be done for less.
SaneIT
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SaneIT,
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4/24/2014 | 7:27:41 AM
Re: In our out
Goals are good but I think when you put hard numbers out there like we see in this instance I believe that the people listening to you are going to hold you to that.  I don't have any problem with a company that wants to pull some more functions back in house as long as it is moving their company forward.  I know several people who work or have worked inside the big 3 and one was a very long term contractor doing programming for them.  I was surprised to hear how much of their labor is outsourced when you consider that they are in a very competitive market and one would expect that they would want to keep some of the projects he was working on in house.  I'm sure at one time outsourcing the jobs looked very good on paper so I wonder what changed.
SaneIT
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SaneIT,
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4/24/2014 | 7:32:30 AM
Re: In our out
I would hope that a company the size of GM could find the talent.  I lived in the Detroit area for a decade so I know the talent is there and I know that a lot of the talent works for companies that directly support the automakers. If they feel like there is a local talent shortage they are the ones who caused it by spinning off and outsourcing to smaller companies like Visteon and Delphi for example.
TerryB
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TerryB,
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4/24/2014 | 2:10:47 PM
Integration is the key
I don't disagree with Jonathon very often but this is a case I side with Mott. SaaS API's are not the same thing as having the full code base to work with when trying to integrate with company wide systems. Does anyone even want to argue that point?

Narrow scope stuff like SalesForce, which is just a wimpy CRM system compared to something like an ERP system, is easy to provide API's for. It only does so much, where do you need to integrate it outside of the sales order processing? We looked at that once. It did so little I just wrote the parts our company needed and it didn't take very long.

But try using a collection of SaaS applications for Sales Order Processing, Trucking/Logistics, Lab testing for meeting product specifications and shop floor control for producing in a make-to-order environment and connecting all those by API so you can block inside sales from shipping orders which have not been lab approved. And if approved, automatically create and send all the shipping paperwork and product certification to the customer, along with whatever the trucker himself needs.

We can do that here because all the code belongs to us. We can do anything we decide we want to do. That will never be true in the Saas world. You will be able to do whatever the vendor thinks MOST of their customers might want to do. And of that subset, what will let them charge you the most in never ending rent.

Integration is the single biggest key to efficiency and quality for any company. SaaS and outsourcing rarely get you there.

I get sick of hearing about NetFlix. I mean, come on, they let you download a file from a catalog and collect your monthly subscription. That's the entire scope of their systems. How many developers couldn't create that? It's only the scale they operate at that is impressive and that's mostly a function of hardware. As a developer, I'd be bored out of my mind working there compared to the manufacturing environment I've always worked in.
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